The Feds Will Continue to Hike Mortgage Rates Past 7%

Mortgage Rates Are Retreating From 7%. They Probably Won’t Stay This Low for Long

We cannot assure you that mortgage rates will continue to fall. But homebuyers who took out a 30-year fixed-term home loan in the past few days have a popular measure of inflation to thank for their lower rates.

According to Mortgage Daily News, the average rate on a 30-year fixed-rate mortgage fell to 6.62% on November 10, down from 7.22% the day before.

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In a Thursday news release, the Mortgage Bankers Association said the rate decline increased in mortgage application volume last week. After adjusting for Veterans Day, home loan applications increased 4%. The average contract rate on a 30-year loan fell from 7.14% to 6.9%.

According to Mortgage Daily News, the average rate on a 30-year fixed-rate loan on Monday was 6.65%. Rocket Mortgage was trading 30-year fixed loans at 6.75% with 2,125 points Tuesday at noon; the average rate for Freddie Mac this week is expected Thursday morning.

After a year filled with rapidly rising mortgage rates, this drop could result in homebuyers saving on loan financing compared to current levels. For example, the buyer of a $400,000 home would save approximately $120 per month by obtaining their loan at a rate of 6.65% instead of 7.22%.

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The price rise in October was lower than expected, triggering a rally in bonds that lowered the 10-year Treasury yield, with which mortgage rates typically rise, by about 0.3 percentage points. After the producer price index, the 10-year bond yield was around 3.82% at noon on Tuesday.

Stocks related to housing experienced a boost. Two exchange-traded funds that track the home building industry, SPDR S&P home builders and iShares U.S. Home Construction, were up about 10% from Wednesday’s close as of Tuesday at noon. Homebuilder stocks will need more clarity on the course of monetary policy for a sustained rally, Barron’s wrote last week.

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